Academic journal article Business Law International

The EU Single Market Information Tool: The European Commission's New Investigatory Power Vis-À-Vis Companies Trading in Europe

Academic journal article Business Law International

The EU Single Market Information Tool: The European Commission's New Investigatory Power Vis-À-Vis Companies Trading in Europe

Article excerpt

Single Market Information Tool in a nutshell

The European Commission (the 'EU Commission'), which is the principal executive power of the European Union (EU), is about to gain a new investigatory power: the Single Market Information Tool (SMIT).1

The SMIT will be granted through a proposed new EU Regulation. It will allow the EU Commission to request business-related information from private firms or trade associations in cases where it initiates or substantiates infringement proceedings against one or more EU Member State(s) that may have failed to fulfil an obligation under the applicable rules of the EU Single Market legislation.2 It is designed to apply to the EU Single Market in its broad sense: a functional area without internal frontiers where goods, people, services and capital circulate freely.

The SMIT will affect a wide range of industries including transport, environment, energy, agriculture and fisheries.3 More generally, the EU Commission will use the SMIT across the EU Single Market, meaning this new power may also affect other sectors such as consumer goods, pharmaceuticals, medical devices, financial services and telecommunications.

The EU Commission is at pains to clarify that the SMIT initiative does not aim to create new enforcement powers allowing it to pursue infringements of EU law in the Single Market against individual market participants. That said, the Single Market rules can be infringed either by Member States or by private companies. Therefore, companies responding to such information requests will not only incur administrative and financial burdens, but they will also have to be careful (among other aspects) not to incriminate themselves in doing so. In addition, companies should prepare themselves by developing the necessary resources for responding to information requests; ensuring that document management systems are in place to minimise the costs of compliance; and undertaking an audit to ensure compliance with the EU Single Market rules.

Over recent years, the EU Commission - in its role as principal executive body of the EU4 - has struggled to access reliable information about the conduct of market participants in order to enforce the EU Single Market rules. Its role as 'guardian of the EU Treaties' is exercised mainly through the infringement proceedings against EU Member States where they may have failed to fulfil an obligation under the EU Treaties.5 The lack of reliable and accurate company-level information available to the EU Commission creates a problem in situations where access to such information is needed to enforce Single Market rules in a timely manner through infringement proceedings against Member States.6

The SMIT relies on the experience of the EU Commission in the antitrust and competition law field where its extensive powers to request information from companies help it to gather robust information for the enforcement of EU competition rules. However, the application of the SMIT will be much broader and could potentially involve any company (with very limited exceptions) operating in Europe. It will be used by the EU Commission as a measure of last resort when all other means to obtain information have failed. Thus, it will be used for cross-border cases where national intervention would not be successful, owing to its scale or effects, and the EU would be better placed to act.

While the EU legislators are to decide on the current draft Regulation in the course of 2018,7 the SMIT remains an absolute priority for the EU Commission.8 Once adopted, the EU Regulation will be published in the EU Official Journal and become directly applicable 20 days later.

This article will offer some background on what the EU Single Market and its rules are, explain why the scope of application of this new EU investigatory power is broad, assess the specific provisions of the proposed new rules, consider the possible concerns for companies and suggest next steps that companies should follow. …

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